(Reuters) – Aurora Cannabis (ACB.TO) (ACB.N) announced a new round of staff cuts on Tuesday and plans to close five facilities in the next two quarters as the COVID-19 pandemic strikes the cannabis industry.
FILE PHOTO: The logo for Aurora Cannabis Inc., a Canadian licensed cannabis producer, is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, USA. USA, January 8, 2019. REUTERS / Brendan McDermid
For most marijuana companies in Canada, which legalized recreational cannabis in October 2018, the gains have turned out to be elusive due to less-than-expected retail stores, cheaper black market rates, and slow growth in abroad.
The industry has been further affected by the COVID-19 crisis, which has also disrupted financial markets, making it difficult to obtain money from investors.
To survive the tough times, Aurora has cut its sales, general and administrative (SG&A) workforce by 25% and will lay off 30% of the production staff in the next two quarters, he said.
The company’s shares rose 2.7% to C $ 19.05.
Aurora announced in February the departure of founder and CEO Terry Booth, 500 job cuts and impairment charges, as he was criticized for his aggressive global expansion amid uncertain demand.
Other pot producers, including Canopy Growth (WEED.TO), Tilray Inc (TLRY.O), Sundial Growers Inc (SNDL.O) and Hexo Corp (HEXO.TO) have also reduced their workforce, emphasizing a drive toward faster returns as investors grow impatient.
Aurora expects selling, general and administrative expenses to be around C $ 42 million ($ 31.07 million) in the first quarter of fiscal year 2021, compared to C $ 75.1 million, excluding compensation costs recorded in the third trimester.
The company has kept tight control on its spending and in May doubled its plans to keep capital spending below Cdn $ 100 million in the second half of the year, adding that it was on track to be profitable next fiscal year.
Aurora, slated to report its fourth-quarter results in September, said it expects deterioration in production assets and other charges of up to Cdn $ 200 million in the quarter.
Report by Arunima Kumar in Bangalore; Editing by Shinjini Ganguli